Intel Corporation to Participate in Upcoming Investor Conferences

[ChrisGar]

That limits the field. They will need to hire someone from TSMC . Or maybe someone from GF. Gary Patton already works at Intel or maybe they can lure Dr. Thomas Caulfield over? Tom pivoted GF and is now successful but growth is questionable since there are no leading edge technologies. The downside, Tom is my age (Pat Gelsinger's age), maybe a younger person would be better suited. I don't see anyone from Samsung being qualified.

Both Gary & Tom have zero product development experience (only foundry/tech development). Given the initial announcement from the BOD -- which talked about priorities / products -- I don't think they would go in that direction.

 

[Artificer60]

No one is really able to address how they realistically bridge the gap. What Marton of Tech Altar calls the valley of death. This is the large negative cash flow that occurs most often with a small startup business after launch, while the market is nascent and consists of early adopters. That is where Intel Foundry is at. The board doesn't like it, and at first it seemed to me, after Anne Kelleher and now Gellsinger were sacked, this reads through to the 18A process being a failure. But as they are saying above there are always issues, and I buy that this is true, because it essentially always is true. So I charitably assume 18A is intact.

But I still don't understand where the money comes from, to keep going. Is the margin on existing Intel products? It feels like there is a hole of $10s of billions hanging over Intel's head that will stop them in their tracks and force bankrupcy or worse.

Ann Kelleher is still with the company. The recent announcement regarding her was with respect to a long term successor. Though no clues regarding what "long term" was were offered.

 

[Fred Chen]

Two statements from Naga give reason to be wary:

1. "And 18A, our biggest customer for the next two, three years is still Intel products,"
2. "Now it is about going through the remaining yield challenges, defect density challenges, continuing to improve it, improving process margin and getting it ramped. Will there be challenges? There will be, but I think we are progressing."

 

[XYang2023]

Two statements from Naga give reason to be wary:

1. "And 18A, our biggest customer for the next two, three years is still Intel products,"
2. "Now it is about going through the remaining yield challenges, defect density challenges, continuing to improve it, improving process margin and getting it ramped. Will there be challenges? There will be, but I think we are progressing."

DZ mentioned some time ago that they only need a few external customers to make the foundry viable. I think that has always been the assumption. Their main goal is to bring wafer production in-house and improve their margins.

 

[Fred Chen]

DZ mentioned some time ago that they only need a few external customers to make the foundry viable. I think that has always been the assumption. Their main goal is to bring wafer production in-house and improve their margins.

I thought this meant that Intel products would be the main driver of foundry revenue in the short term.

 

[XYang2023]

I thought this meant that Intel products would be the main driver of foundry revenue in the short term.

Personally, I believe margin is the top priority. Intel should allocate resources only if they deliver a strong ROI. My understanding is that building fab services is akin to providing insurance contracts for other U.S. companies, but those companies aren’t paying the premiums. Currently, Intel’s market cap is significantly lower than that of many other companies. Therefore, it should focus on strengthening its own position. In this context, I tend to think what PG has been doing is misguided—essentially providing benefits to competitors.

 

[Daniel Nenni]

Ann Kelleher is still with the company. The recent announcement regarding her was with respect to a long term successor. Though no clues regarding what "long term" was were offered.

Ann Kelleher spoke at an industry event last night. She is definitely still with Intel. I had heard her issue was with Pat G and now that is no longer an issue. I saw Ann earlier this year, tonight she looked different so maybe it is a health issue?

Maybe Intel can have Co CEOs, one for product and one for foundry? It really is a totally different job.

Hock Tan won the Dr. Morris Chang Award of excellence tonight. He did a great (short) speech. Hock should buy Intel. He would right that ship, absolutely. The place was full of semiconductor CEOs and Hock is the only one I think of that can fix Intel.

 

[XYang2023]

Ann Kelleher spoke at an industry event last night. She is definitely still with Intel. I had heard her issue was with Pat G and now that is no longer an issue. I saw Ann earlier this year, tonight she looked different so maybe it is a health issue?

Maybe Intel can have Co CEOs, one for product and one for foundry? It really is a totally different job.

Hock Tan won the Dr. Morris Chang Award of excellence tonight. He did a great (short) speech. Hock should buy Intel. He would right that ship, absolutely. The place was full of semiconductor CEOs and Hock is the only one I think of that can fix Intel.

Should Intel focus on IDM? Would that be less costly, requiring fewer fabs?

Intel should exit the foundry business, Citi says By Investing.com

Intel should exit the foundry business, Citi says

www.investing.com

I recall he suggested exiting the foundry business while continuing to produce CPUs for its own needs. Would that be something similar to Micron?

 

[Daniel Nenni]

Two statements from Naga give reason to be wary:

1. "And 18A, our biggest customer for the next two, three years is still Intel products,"
2. "Now it is about going through the remaining yield challenges, defect density challenges, continuing to improve it, improving process margin and getting it ramped. Will there be challenges? There will be, but I think we are progressing."

I know several customers that have the new 18A PDK 1.1 and Intel will get some business for sure. But as I have said before it is the NOT TSMC business, companies who are looking for an alternative to TSMC. Imagine price negotiating with TSMC? "If you don't lower your pricing I will take my business elsewhere!" CC Wei would laugh at that one all the way to the bank. Not only do you need a second source but at this point you need to use it if you want to be taken seriously in price negotiations. So if they are not now looking at Intel 18A as a second source they will be soon, absolutely.

Granted, the first Intel 18A customers will not be high runners. Nobody is going to risk a product future on a new process. But there are plenty of small to medium sized runners that can keep Intel 18A busy to prove that Intel Foundry is a viable alternative to TSMC. CHiplets make this even easier. It is much easier to run a chiplet design in parallel foundries than a whole chip.

I ran this buy some TSMC people last night and they all want Intel 18A to be successful to avoid the M word (monopoly). They do not, however, wish Samsung well, in fact, quite the opposite. There is too much dark history there.

 

[XYang2023]

I know several customers that have the new 18A PDK 1.1 and Intel will get some business for sure. But as I have said before it is the NOT TSMC business, companies who are looking for an alternative to TSMC. Imagine price negotiating with TSMC? "If you don't lower your pricing I will take my business elsewhere!" CC Wei would laugh at that one all the way to the bank. Not only do you need a second source but at this point you need to use it if you want to be taken seriously in price negotiations. So if they are not now looking at Intel 18A as a second source they will be soon, absolutely.

Granted, the first Intel 18A customers will not be high runners. Nobody is going to risk a product future on a new process. But there are plenty of small to medium sized runners that can keep Intel 18A busy to prove that Intel Foundry is a viable alternative to TSMC. CHiplets make this even easier. It is much easier to run a chiplet design in parallel foundries than a whole chip.

I ran this buy some TSMC people last night and they all want Intel 18A to be successful to avoid the M word (monopoly). They do not, however, wish Samsung well, in fact, quite the opposite. There is too much dark history there.

What could be the reason for the board to let PG go or retire when 18A appears to be progressing as planned?

 

[Daniel Nenni]

Should Intel focus on IDM? Would that be less costly, requiring fewer fabs?

Intel should exit the foundry business, Citi says By Investing.com

Intel should exit the foundry business, Citi says

www.investing.com

I recall he suggested exiting the foundry business while continuing to produce CPUs for its own needs. Would that be something similar to Micron?

How would he know? Seriously. These so called analysts throw spaghetti on the wall and if a noodle sticks they are heros with no mention of the many noodles on the floor rotting away.

Vahid Karaahmetovic
Vahid is an enthusiastic financial journalist with a focus on covering stock market developments and finance news. He holds a bachelor’s degree in Cinema-TV.

Intel is an IDM foundry, just like Samsung. We do need IDM foundries who can justify the massive CAPEX required to make fabs profitable. It would take a trillion dollars to replicate TSMC's path of pure-play foundry success. There will never be another TSMC. For any company, even IDM foundries, to think they will beat TSMC in the foundry business is absurd. Several companies have tried, many billions of dollars have been lost, the result is always the same: TSMC gets even stronger.

 

[XYang2023]

How would he know? Seriously. These so called analysts throw spaghetti on the wall and if a noodle sticks they are heros with no mention of the many noodles on the floor rotting away.

Vahid Karaahmetovic
Vahid is an enthusiastic financial journalist with a focus on covering stock market developments and finance news. He holds a bachelor’s degree in Cinema-TV.

Intel is an IDM foundry, just like Samsung. We do need IDM foundries who can justify the massive CAPEX required to make fabs profitable. It would take a trillion dollars to replicate TSMC's path of pure-play foundry success. There will never be another TSMC. For any company, even IDM foundries, to think they will beat TSMC in the foundry business is absurd. Several companies have tried, many billions of dollars have been lost, the result is always the same: TSMC gets even stronger.

It is Citi's analyst - Christopher Danely.

https://www.thestreet.com/investing/stocks/analyst-intel-should-drop-foundry-business

 

[Daniel Nenni]

What could be the reason for the board to let PG go or retire when 18A appears to be progressing as planned?

Because Pat set the board expectations to high and spent the money to support those high expectations. The Intel Board now has a ground level view of the foundry business so cuts will be made. The real reason why Lip-Bu left the board (the truth always comes out) is that Lip-Bu wanted deep cuts at Intel. Instead Pat hired 15k people and spent money like a drunken sailor. Lip-Bu's resignation started Pat's demise (my opinion).

Will Lip-Bu be the next Intel CEO? No he will not. There are too many conflicts in Lip'Bus portfolio of companies. Will the next Intel CEO follow the Lip-Bu plan? My guess is yes, the Intel Board has seen the light. Hock Tan should have been put on the Intel BoD. The Hock Tan business strategy can save Intel.

 

[XYang2023]

Because Pat set the board expectations to high and spent the money to support those high expectations. The Intel Board now has a ground level view of the foundry business so cuts will be made. The real reason why Lip-Bu left the board (the truth always comes out) is that Lip-Bu wanted deep cuts at Intel. Instead Pat hired 15k people and spent money like a drunken sailor. Lip-Bu's resignation started Pat's demise (my opinion).

Will Lip-Bu be the next Intel CEO? No he will not. There are too many conflicts in Lip'Bus portfolio of companies. Will the next Intel CEO follow the Lip-Bu plan? My guess is yes, the Intel Board has seen the light. Hock Tan should have been put on the Intel BoD. The Hock Tan business strategy can save Intel.

I was thinking along the same lines. I disliked the way he allocated Intel's resources—a lot of waste, potentially on the same scale as the CHIPS Act awards.

 

[Daniel Nenni]

It is Citi's analyst - Christopher Danely.

https://www.thestreet.com/investing/stocks/analyst-intel-should-drop-foundry-business

And what are his qualifications to make such a statement? Because he is a successful stock picker? Did he mention the "M" word? Does anyone here see a problem with TSMC being the only leading edge foundry in the world? How about having a US based leading edge semiconductor manufacturer? Is that important to the security of our country?

I realize that dumping manufacturing would help the Intel stock price but I think it would be short term. Intel is not innovating on the design side enough to regain their glory. The competition is too fierce. There are hundreds of companies chomping at the AI pie and the shake-out is coming, absolutely. Having design and leading edge manufacturing is a big differentiator and Intel is the only one to have that today.

Take a look at the Intel IEDM papers. The process innovation continues....

 

[tooLongInEDA]

Should Intel focus on IDM? Would that be less costly, requiring fewer fabs?

Intel should exit the foundry business, Citi says By Investing.com

Intel should exit the foundry business, Citi says

www.investing.com

I recall he suggested exiting the foundry business while continuing to produce CPUs for its own needs. Would that be something similar to Micron?

Is that actually an option ? Do the economises of scale still work for that ?

Does Intel have the internal demand to cover the development and basline fab costs of the newest processes ? Their one reliable business line - x86 - is a relatively mature market and a decreasingly important one in the overall big digital IC world. Can they even maintain their historic margins when competitors are making more on advanced AI chips ?

Isn't the reality either pulling off IDM2.0 with a big foundry business - or going fabless ? With no middle ground left.

 

[XYang2023]

Is that actually an option ? Do the economises of scale still work for that ?

Does Intel have the internal demand to cover the development and basline fab costs of the newest processes ? Their one reliable business line - x86 - is a relatively mature market and a decreasingly important one in the overall big digital IC world. Can they even maintain their historic margins when competitors are making more on advanced AI chips ?

Isn't the reality either pulling off IDM2.0 with a big foundry business - or going fabless ? With no middle ground left.

I think there should be a middle ground, as TSMC should allow some competition in the market to avoid being labeled a monopoly. Intel, on the other hand, needs to be both pragmatic and profitable.

 

[Daniel Nenni]

I was thinking along the same lines. I disliked the way he allocated Intel's resources—a lot of waste, potentially on the same scale as the CHIPS Act awards.

I have heard it called "capital efficiency and cost discipline" which does not accurately describe Intel's standard operating procedure.

Building semiconductor fabs is expensive so you must make sure they are fully utilized. The whole reason the fabless business started was because the IDM fabs were not full so they leased out capacity to small companies like Chips and Technology (the first fabless company which is referenced in my first book and Morris Chang's second book).

The same can be said today, you must fill those fabs. To solve that problem TSMC builds fabs based on customer demand. Some big TSMC customers even pay in advance to build those fabs and guarantee capacity.

IDM foundries (Intel and Samsung) build fabs in hopes customers will come and customers do not come if there is risk of not getting the wafers within the timeframe required. Today the risk is too high for Intel and Samsung foundry for the big fabless customers.

The other risk is TSMC being a monopoly and TSMC being a political pawn in the China vs US chess game.

In business all risks must be balanced out for a more predictable outcome thus the need for second sourcing. My personal mantra is hope for the best but plan for the worst and you will not be disappointed.

Given all of that, Intel Foundry is imperative and Intel Foundry needs Intel design for process development and help filling the fabs. If you split Intel the investors may be happy but it will be short lived because they will both fail to meet investor and industry expectations, just my opinion as a 40 year semiconductor professional and investor. I am not a professional stock picker or armchair analyst. I am one of the many semiconductor professionals that do the work.

 

[hist78]

The board was clear that the Intel strategy remains intact (IDM 2.0?) but wants to put emphasis on the foundry side to make sure it is successful. Intel has made a lot of investments and the board wants to see ROI.

"The new Intel CEO will have foundry experience" ...

That limits the field. They will need to hire someone from TSMC . Or maybe someone from GF. Gary Patton already works at Intel or maybe they can lure Dr. Thomas Caulfield over? Tom pivoted GF and is now successful but growth is questionable since there are no leading edge technologies. The downside, Tom is my age (Pat Gelsinger's age), maybe a younger person would be better suited. I don't see anyone from Samsung being qualified.

From what I see today 18A is ready to go and is a great offering for the NOT TSMC HPC business. That said, Intel 14A is critical for the foundry business to continue. Customer expectations must be properly set AND met. If that is the case Intel Foundry will succeed. If not, Intel foundry will flounder and continue to be a money pit.

But TSMC and its people are best in the manufacturing - the foundry business. Those executives who are good in products are most likely working at the fabless companies such as Qualcomm, Nvidia, AMD, MediaTek, and Apple.

If Intel insists to find a new CEO who is good in both products and foundry business, it probably limits the candidate pool to people from Samsung and Intel itself.

 

[blueone]

I have heard it called "capital efficiency and cost discipline" which does not accurately describe Intel's standard operating procedure.

Building semiconductor fabs is expensive so you must make sure they are fully utilized. The whole reason the fabless business started was because the IDM fabs were not full so they leased out capacity to small companies like Chips and Technology (the first fabless company which is referenced in my first book and Morris Chang's second book).

The same can be said today, you must fill those fabs. To solve that problem TSMC builds fabs based on customer demand. Some big TSMC customers even pay in advance to build those fabs and guarantee capacity.

Intel used to have the high-utilization mindset when I worked there over ten years ago. As a senior Intel finance person once told me (I'm paraphrasing): "We work with sales and manufacturing to figure out how many wafers we'll need for the product lines, with manufacturing to estimate yield for the new process, calculate how many fabs for the new process it'll take to meet the demand, and then we round down or subtract one. You never want an under-utilized fab." I thought about that conversation for a long time afterward.